Marstons Plc v Charman & Ors

Case-management powers are flexible and may be exercised on the court’s own initiative, but they must be used proportionately and fairly. A substantial payment-into-court condition, backed by strike-out of a defence and counterclaim, should not be imposed without warning and a proper opportunity to address it, particularly where the application concerns compliance with directions rather than the merits. An unless order may be sufficient to cure procedural default. The court must ensure that any sanction advances the efficient conduct of proceedings and does not operate as unfair pressure to abandon a defence.

Marstons Plc claimed several hundred thousand pounds from pub tenants and a guarantor in respect of rent, dilapidations and related liabilities. The defendants’ amended defence raised issues concerning dilapidations, guarantee formalities and alleged misrepresentations about the trading prospects of the premises.

After Mr Charman became a litigant in person, Marstons applied to strike out the defence and counterclaim for non-compliance with directions. The judge refused strike-out on that basis and made a seven-day unless order, but also ordered payment into court of £93,000, with failure to pay resulting in strike-out. The central issue was whether that condition could properly be imposed without an application, warning or opportunity to respond.

1. Appeal allowed unanimously. The judge had power, including on his own motion, to impose a condition requiring payment into court. The existence of that power did not justify its use in a disproportionate, unfair or inappropriate manner.
2. The condition was imposed without an application for payment into court, summary judgment or security for costs, and without warning Mr Charman, who was acting in person, that such an order was contemplated. He therefore had no proper opportunity to address the order or demonstrate the substance of his defence.
3. The application before the judge concerned compliance with procedural directions. Any outstanding defaults could be addressed by the unless order. Requiring payment of a substantial sum was not suitably directed to securing timely compliance and operated in substance as unfair pressure to bring the defence and counterclaim to an end.
4. Biguzzi v Rank Leisure Plc [1999] 1 WLR 1926 remained good guidance. Flexible case-management powers should be used proportionately, rather than by imposing an extreme sanction when a more measured response is available.
5. It was also procedurally inappropriate for the judge, without the issue being raised or debated, to assess the merits of the defence and describe it as shadowy, particularly when dealing with a litigant in person. The payment condition was set aside and the appeal was allowed.

1. Court of Appeal (Civil Division) On 29 April 2009, the appeal was allowed. The court held that the payment-into-court condition was disproportionate and unfair.
2. Queen’s Bench Division, Birmingham Mercantile Court HHJ Simon Brown QC made the order on 31 October 2008. He refused strike-out for delay, made an unless order, and additionally required payment into court of £93,000.